Subscribe to Free Daily Newsletters
Post a Job

Featured Jobs

DC Plan Administrator
Heritage Administrative Services, LLC
(Woodbury NY)
DC Plan Administrator

The Benefit Advantage
(Auburn Hills MI / Telecommute)
Defined Contribution Plan Administrator

The MandMarblestone Group, llc
(Philadelphia PA / Telecommute)
Retirement Plan Administrator

Group RHI
(Telecommute)
Defined Contribution Plan Specialist

Aprio
(Alpharetta GA / AL / NC / Telecommute)
Defined Benefit Plan Administrator

AimPoint Pension
(Telecommute)
ESOP Administrator

Blue Ridge ESOP Associates
(VA / Telecommute)
Pension Systems Administrator
DeMars Pension Consulting Services, Inc.
(Overland Park KS)
Retirement Plan Consultant

DWC - The 401(k) Experts
(Telecommute)

Free Daily News and Jobs

“BenefitsLink continues to be the most valuable resource we have at the firm.”

-- An attorney subscriber

Get the BenefitsLink app LinkedIn
Twitter
Facebook

BenefitsLink > Q&A Columns >

Who's the Employer?

Answers are provided by S. Derrin Watson, JD, APM

Controlled Groups and SIMPLE IRAs

(Posted November 18, 1999)

Question 35: A is 100% owner of two S corps and would like to establish SIMPLE IRAs for both. Can A defer up to $6,000 in each SIMPLE IRA? Also, would his dollar-for-dollar matching contribution be based on his combined income (up to maximum of $200,000) from both S corps?

Answer: Here's someone who wants to have his cake and eat it too! He wants to combine the businesses to compute compensation but split them for the deduction limits.

Alas, life doesn't work that way, and neither does the Internal Revenue Code.

The two corporations are a controlled group under IRC 1563 and 414(b). As such, they are treated as though they were a single business for purposes of 408(p), the SIMPLE rules. Thus, there would be one plan, covering employees of both businesses. A plan covering employees of only one business would violate 408(p)(4). There is a single $6,000 limit. Matches are based on aggregate compensation.


Important notice:

Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner or to readers. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of this and similar situations.

The law in this area changes frequently. Answers are believed to be correct as of the posting dates shown. The completeness or accuracy of a particular answer may be affected by changes in the law (statutes, regulations, rulings, court decisions, etc.) that occur after the date on which a particular Q&A is posted.


Copyright 1999-2017 S. Derrin Watson
Related links:

(restricted access)

(restricted access)

© 2019 BenefitsLink.com, Inc.